The Oregon Legislature's joint committee on tax credits took its first look Tuesday at whether to extend one of the state's most controversial tax subsidies -- the business energy tax credit -- or allow it to sunset at the end of June 2012.

The tax credit's revenue impact has ballooned from $79 million in the 2005-2007 biennium to an estimated $290 million in the upcoming two-year budget cycle as the state has put its policy shoulder behind renewable energy development.

That growth alone makes it a fat target for budget cutters. But lawmakers also have struggled to get a handle on the sheer breadth of the BETC program, its various policy goals, and the lack of data or criteria to determine whether they've been achieved.

The BETC program is slated to sunset in 2012, halfway through the coming biennium, though the impact of outstanding credits on state revenue will continue for years. Meanwhile, legislators were offered plenty of testimony Tuesday on why the program should be extended until the budget recovers. The debate is shaping up as a contest between conservation, the traditional focus of the credits, and renewable energy projects, which have driven growth in the program since it was expanded in 2007.

Extending the sunset date would cost only an additional $10 million in the 2011-2013 biennium, according to the Legislative Revenue Office. But by some estimates that's as much as the Legislature has to spend on all tax credits combined.

Historically, the BETC subsidized conservation measures such as rental property weatherization, commercial lighting improvements and variable speed motors for industrial equipment. Home builders, industrial employers and weatherization contractors made the case Tuesday that conservation was still the best use of the state's limited dollars, offering the cheapest energy savings and the biggest employment impact.

"The Legislature got it right 30 years ago," said Jerry Page, owner of Total Comfort Weatherization in Salem. "Hopefully, you'll continue that."

Renewable generation advocates may have the toughest sell. The state has provided tens of millions of dollars in subsidies to large-scale wind farms in the last five years, but a recently released study commissioned by the Legislature suggests those projects would have gone ahead without state tax credits.

Sen. Frank Morse, R-Albany, asked Tuesday why the state needed to subsidize big renewable generation projects at all when Oregon's largest utilities already are required to meet 25 percent of their customers' needs with renewable energy by 2025.

"Why should we spend tax dollars to do what is required by law?" he asked.

Bob Repine, acting director of the Oregon Department of Energy, responded that it would be difficult for utilities to meet the progressively higher state mandates without some participation by the state. But he didn't provide any explanation.

In fact, utilities are well on their way to meeting interim state targets. The credits typically provide a tiny fraction of the cost of a large wind farm, which utilities recover from ratepayers.

"If ratepayers want to fund it, they should fund it," Telfer said in an interview. "The reality check might open some people's eyes about what we're doing" with the state's renewable energy policy.

Alan Hickenbottom, president of Tanner Creek Energy, provided the only industry testimony Tuesday in favor of the renewable energy BETC. He said the credits have been instrumental in growing commercial solar installations in Oregon, which he said were increasingly cost competitive.

The third big slice of the BETC pie has gone to support renewable energy equipment manufacturers that have built factories in Oregon. The committee voted to move a bill to the Oregon House that would move the administration of that credit from the state Department of Energy to its economic development arm, Business Oregon. But it did not take any testimony Tuesday on the manufacturing program.